September 10, 2007

America's Tax Policy

Your responses have been extremely gratifying to me. It shows--not to be too arrogant here--that my analysis in The Big Con was right on the money. You haven't really disagreed with me on the descriptive propositions. You're simply accepting my description of what's happened and saying that it's a good thing.

You raise two main points. The first is to contrast the present era with the 1950s, which had higher taxes, regulation, etc. Like so many fellow conservatives, you seem totally unable to grasp the idea that something can be somewhere between absolutely true and absolutely false. You cite this very commonly cited statement by President Kennedy: "It is a paradoxical truth that tax rates are too high today and tax revenues are too low--and the soundest way to raise revenues in the long run is to cut rates now."

You know what the key word in that sentence is? "Today." When Kennedy said that, the top tax rate was 91 percent. I agree, a marginal tax rate of 91 percent is too high. That doesn't mean that a 39.6 percent marginal tax rate is too high.

You write, "I fail to see how Kennedy's insight is wacky. In your book you recognize that marginal tax rates affect behavior." Yes! But I also write very explicitly that the effect depends entirely upon the rate in question. You and your fellow conservatives insisted that George H. W. Bush's budget deal which raised the top tax rate from 28 percent to 31 percent would create economic catastrophe, and predicted the same about Bill Clinton's hike of the top tax rate to 39.6 percent. That's wacky.

Veering further into insanity, you propose that a progressive tax is the moral equivalent of segregation. "Everyone should be equal before the law," you say. Well, everyone is equal before the law. The law says that everyone, including Bill gates, pays 10 percent on their first X dollars, 15 percent on the next X dollars, and so on.

Yes, richer people pay a higher tax rate. The thinking is that they can afford it more easily than people with low incomes. You think that's the same as discriminating against citizens on the basis of race?

Yes, I know you do. Which is what I wrote in the book. In Chapter 4, I describe how many conservatives see the rich as a powerless minority whom they must protect against the whims of the masses. Their fear is what former GOP Ways and Means Committee Chairman Bill Archer called the "tyranny of the majority," or what, in more colloquial terms, we would call democracy.